How will variable rates at 12 major banks move after the BOJ's additional rate hike? We examine the possibility that differences in the timing of rate adjustments could reshuffle the interest-rate rankings, together with each bank's review rules and key points to watch.
The BOJ raised its policy rate to 1.25%. Against this backdrop, we examine three elements of variable mortgage rates at 12 major banks: current applicable rates, increases not yet reflected, and base rates and discount margins, and explain the outlook for the banks offering the lowest rates and how to choose among them.
The timing of rate adjustments varies by bank, creating a time lag. At MUFG Bank, the timing differs between the monthly and twice-yearly adjustment models. PayPay Bank reviews its base rate for new borrowers every month, but in some cases reviews rates after borrowing twice a year.
The review of the borrowing rate and the review of the monthly repayment amount are separate matters. Under an equal-payment repayment method with a five-year rule, the repayment amount remains unchanged for five years even when interest rates rise. However, the interest portion increases and the principal declines more slowly, which requires attention.
Rather than pursuing only the lowest rate available now, it will be important to choose a bank by considering the level after rates have moved into line and the extent to which future increases may be contained. Do not forget to check for exceptions based on the contract timing and product.
The article organizes the policy rate change and each bank's rate review rules, and explains the outlook for interest-rate trends going forward and how to approach choosing a bank.